Institutional Arrangement of Integrated River Basin Management: Analysis of River Basin Organization

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Institutional Arrangement of Integrated River Basin Management: Analysis of River Basin Organization

Lessons from UK and USA (Case Study: Indonesia)

THESIS

A thesis submitted in partial fulfillment of the requirements for the Master Degree from University of Groningen and the Master Degree from Institute of Technology Bandung

by:

FITYAN AONILLAH

RUG : S 1623273

ITB : 25405027

DOUBLE MASTER DEGREE PROGRAMME

ENVIRONMENTAL AND INFRASTRUCTURE PLANNING FACULTY OF SPATIAL SCIENCES

UNIVERSITY OF GRONINGEN AND

DEVELOPMENT PLANNING AND INFRASTRUCTURE MANAGEMENT SCHOOL OF ARCHITECTURE, PLANNING, AND POLICY DEVELOPMENT

INSTITUTE OF TECHNOLOGY BANDUNG

2007

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Abstract

Existing institutional arrangement of river basin management in Indonesia leads to some problem concerning authority, boundaries, coordination, and integration. Some studies reveal that the problem is also faced by other developing countries in Asian and Latin America. Now Indonesia is trying to reform water sector by issuing new Water Resources Act. In basin level, it will emphasize on institutional and financial framework. This process is pushed by the declining of water resources and government reorganization through decentralization in 2000. There is a plan to reorganize existing institution responsible to river basin management (river basin organization) in order to enhance its environmental and financial performance.

This research makes comparative analysis of river basin organization among United Kingdom (UK), United States of America (USA), and Indonesia. It also considers the opportunity to take a lesson from UK and USA experience for Indonesia. UK and USA has long history in dealing with water sector problem including water management at basin level. Many book and studies often use UK and USA as object to be analyzed. It is assumed that conducting comparative analysis with UK and USA to take lesson will be useful.

The research concludes on several findings. Firstly, from theoretical exploration, it reveals that good implementation of integrated basin management concept in a country can’t be fully duplicated without any consideration. Some elements have to be carefully paid much attention before transferring policy, such as physical attributes, structure of the demand in the basin, legal structures of the state, historical experiences, principles of institutional design, and development of basin management. This finding from theoretical exploration lead to the importance of understanding context in which river basin organization in UK and USA emerge. Secondly, from study case and comparative analysis, it finds the positive aspect on integration either intra-environmental aspect or environmental-economics aspect. It finds also that strongly environmental institution is needed to ensure that environmental standard is fulfilled by water- related stakeholder.

For the case of Indonesia, recomendation is proposed not to create a new institution in accordance with water reform proces but improving authority and redesigning institutional frame work of existing institution.

Keywords: institutional arrangmement, river basin organization, integration, environmental aspec.t

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Preface

My thesis is inspired by my experience as planning staff of Forest and Plantation Agency in my region. One of my office’s tasks is to implement central government project through Ministry of Forestry to rehabilitate critical land in up-stream area in Citanduy River Basin. The project is conducted annually through reforestation and soil conservation program and supervised by a Technical Management Unit, Watershed Management Office of Cimanuk- Citanduy as branch office of Directorate General Land Rehabilitation and Social Forestry, Ministry of Forestry. Although this project has been performed since 1980s, the result is not as good as expected. Instead, the number of critical land in up-stream area increases and influences the performance of Citanduy River Basin.

I think there is something wrong in this project but I am sure it is not from technical aspect. As there is no coordination among agencies responsible to Citanduy River Basin either in planning process and implementation stage of the project, I think the problem come from institutional aspect. In addition, the course of International Planning Practice and Water Management encourage me to choose theme of institutional aspect of river basin management as topic of my thesis.

Firstly, I would like to thank to my first supervisors, Dr. Johan Woltjer for guidance and suggestion from thesis proposal until final thesis. I also appreciate all advice from Dr. Roos Akbar as my second supervisor from ITB, especially when he came to RuG Groningen. Secondly, I would like to thank to following people for all support, since I studied the first year at ITB, Bandung until finished studying at RuG, Groningen : Prof. G.J.J. Linden, and staffs at Faculty of Spatial Planning, RuG; Dr. Ir. Uton Rustan, M.Sc., and staffs at Department of Regional and City Planning, ITB, Bandung; Dr. Ir. Haryo Winarso, M.Eng; Dr. Ir. Dedy S.

Priatna, MSc; Staffs at Pusbindiklatren, Bappenas, Jakarta; Monic Soesman and staff at NESO, Jakarta; Drs A. Gumawang Jati, MA, and staffs at Language Center, ITB, Bandung; Friends of Double Degree Program 2005 for being family in Bandung and in Groningen; friends, and Colleagues in Local Government of Tasikmalaya Regency, West Java; my parents and my beloved wife, Dewi Anggraini, for endless support and love.

Groningen, 2007

Fityan Aonillah

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Tables and Figures

Tables

Table 1 Institutional Change, Risk, and Liability in UK ... 26 Table 2 US River Basin Organization, Member and Function ... 34 Table 3 Master Plan of Brantas River Basin, its objectives and finished

structure ... 37 Table 4 The Number of Water Resources Management Agency each

Province Based on Ministerial Decree No. 176/1996 ... 38 Table 5 The Number of Water Resources Management Agency created

in 2001 ... 38

Figures

Figure 1 Research Methodology ... 7 Figure 2 Set of Factors Determining the Appropriate and Workable Basin

Organization... 20 Figure 3 Framework of Analysis... 22 Figure 4 Institutional Framework of Water in UK ... 28 Figure 5 River Basin Organization on Developed River Basin (PJT I and II).... 43

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C ^{hapter 1} I ntroduction

1.1 Background

River basin in Indonesia, based on Ministerial Regulation of Public Work No.

48/1989 is divided into 90 river basins (SWS). Most of them (73 river basins) are fully located in one province and are known as provincial river basin, while 17 remains are inter-provincial river territories or national river basin. All of those river basins fall into to two category, developed river basin and less developed river basin.

Developed river basin is defined as basin in which the water infrastructures both irrigation network and dam has been completely built to serve large agriculture area.

It is also located in developed area in term of agriculture and industry. On the other hand, less developed river basin is a basin with poor water-infrastructure and located in less developed region.

In developed river basin, Indonesian government created two River Basin Cooperation, namely Perum Jasa Tirta II (PJT II) of Citarum River Basin, in West Java Province in 1970 and Perum Jasa Tirta I (PJT I) of Berantas-Bengawan Solo River Basin in East Java Province in 1990. These two River Basin Cooperation fall under central government authority through State Ministry of Enterprise because it is state- owned enterprise. In less developed river basin, government created Basin Water Operation Unit (Balai PSDA) in 1996 to implement water resources management concept with river basin approach (Anshori, 2002). This agency is set up under Provincial Public Work Service. However, the division of organization managing river basin is not completely separated. There is also Balai PSDA in developed river basin which share task and function with River Basin Cooperation.

Since Balai PSDA is under provincial government, its boundaries also follow provincial boundaries, namely administrative boundaries. This fact generates first

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problem of integrated river basin management as it has to be theoretically managed based on hydrological boundaries. Jasper (2003) emphasize that an river basin institution operating on administrative boundaries couldn’t work well because it will be constrained by what happens in upstream or downstream area. It can be understood as upstream and downstream area does not fall in one management.

The second problem is duplicating role emerged in developed river basin when two institutions (River Basin Cooperation and Balai PSDA) are responsible for management in one river basin. The principle of one basin one management is not met.

As Indonesian government issued new Water Resources Act No 7/2004, formal starting point to reform water sector was started. This law was created to anticipate water scarcity and enhance private and communities participation in water management. This act will also implicate on water management at basin level.

Government has a plan to establish other new River Basin Cooperation beside the existing ones. It is accordance with one of four objectives of water reform, namely improving the organizational and financial framework for river basin management (Bandaragoda, 2006). The plan to establish new River Basin Cooperation and the spirit of new Water Resource Act to enhance private and communities participation lies in the master plan to create self-financing river basin organization concept. The dependency on national budget does not stimulate any development of functional responsibility at the level of the river basin (Jasper, 2003). This condition leads to the need of understanding cost recovery concept in river basin management in which beneficiaries has to pay some amount of money for their water allocation. The other issue of water reform at basin level is the role of stakeholders and its relation with existing river basin organization either in developed or less developed river basin.

Some studies reveal that problem in river basin management faced by Indonesia is a general problem emerge particularly in developing countries. Study conducted by Bandragoda (2006) in some Asian countries concludes that all countries now try to

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improve water resources through more effective water management institution.

Unfortunately, the institutional reforms run slowly due to social, economic, and political constraint. It is also recognized that management of water resource especially in river basin level is still purely on sectoral lines by multiply government agencies with little inter agency coordination. Another study conducted by Garcia (1999) to review the role of river basin organization in Latin America reveal that most of countries still face serious institutional shortcoming that come from legal, organizational, and financial issues.

The decision to take lesson from UK and USA‘s experience is based on some consideration. UK is a country which has century and a half of institutional development of river basin management (Newson, 1992). It also experienced several adjustment in its river basin organization to deal with a change in social, economic, and political context. It gives comprehensive development from local authority service in water aspect toward regional authorities under central government.

Uniformly regional river basin organization with integrated approach over many environmental aspect might be useful as a lesson for country in which role of central government is still dominant. On the other hand, USA gives different perspective with its river basin organization. There are many types of river basin organization as reflections of balance power between federal and state government. Different type of river basin organization has also different function based local environmental problem. Moreover, two extreme natural characteristic, dry in the west and wet in the east, gives different emphasizes in function of river basin organization. In short, two countries, UK and USA, will give comprehensive perspective of river basin organization from uniform river basin organization to diverse one, from central government dominance to balance power of federal-state government, and from uniformly function of river basin organization to different function based on locally environmental problem. Two pole of perspective in river basin management is considered to be important lesson as most of developing

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countries try to reform their water management and search appropriate model of river basin organization.

United Kingdom and United States of America’s Background

UK and USA has long history concerning river basin management. UK had fully implemented concept of integrated river basin management since 1974 when established Regional Water Authorities. This organization even played dual role as operator and regulator. Many authors criticized this dual role because it would generate conflict of interest. UK experienced ultimate phase in managing river basin when performed privatization in 1989 in which sold water supply and sewage treatment companies to private sector and created National River Authority as a substitution of RWAs. In 1995, based on Environmental Act, National River Authority merged with Majesty of Pollution become Environment Agency. This agency is ultimate evolution of river basin organization in UK which is not only as provider but also as guardian of environment.

USA also has long history concerning managing river basin. It was started by creating Mississippi River Basin Commission in 1879 to anticipate regular flood from Mississippi River. Before that year, flood protection was locally performed by riparian authorities and couldn’t work well. The most monumental history of river basin organization was the establishment of Tennessee Valley Authority (TVA) in 1933. Unlike UK with one uniformly River Basin Organization, USA has many type of organization with different environmental aspects.

1.2 Research Objectives

The objective of this research is to acquire knowledge of how river basin organization can implement integrated river basin management approach can and deal with water-related problem based on social, economic, and political context.

This research tries also to get some recommendation for appropriate river basin organization for Indonesia considering lesson from UK and USA.

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1.3 Research Question

The research questions can be formulated based on previous research objectives as follows:

1. How are institutional arrangement in river basin management in UK, USA, and Indonesia?

This question will discover experience of UK, USA, and Indonesia in managing river basin especially how the institution or river basin organization develop through several stages in period of time, implement concept of integrated river basin management, and cooperate with other governmental agencies and stakeholder, and deal with some constraint.

2. What can be learn from UK and USA for Indonesia?

This question will discuss some elements both similarities and differences in three countries based on earlier discussion by comparative analysis. After that, important aspect will be drawn and explored its opportunity to be adopted by Indonesia.

1.4 Research Methodology

This research will be developed by several methodological steps as follows:

1. Developing theoretical framework

This stage develop concept of institutional arrangement on river basin management as tool to implement integrated river basin management concept and then focusing on river basin organization by recognising type of several river basin organization, its function, and example. This stage also include concept of development stage of river basin together with several important aspect should be considered in determining type of river basin organization 2. Collecting and Information from the experiences from United Kingdom, United States of

America, and Indonesia.

Data of the research come from secondary data sources: books, journals, and internet articles. This data encompass evolution river basin organization in three

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countries and recent river basin organization. The first data is useful to understand context in which river basin organization develop. The second one as ultimate development of river basin organization give information its emphasize on water-related issue, and coordination with other stakeholder.

3. Analysing the possibility of policy transfer

Based on data and information from previous discussion, this stage tries to elaborate possibility to transfer the policy. It will be done by comparing elements and characteristic of each river basin organization in three countries try to find out policy that might be transferred and what condition could support the implementation and what the constraint.

4. Formulating recommendation to improve river basin performance through river basin organization in Indonesia.

At the end, this research will suggest some recommendation to increase performance of river basin organization in Indonesia based on experience from UK and USA adjusted by Indonesian context.

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Figure 1. Research Methodology 1^stReview Developing theoretical framework of institutional arrangement concept in river

basin management

2^ndReview Review the river basin organization in UK, USA and

Indonesia.

Data Collection

Articles,

Research Reports,

Books,

Publications,

Internet .

Comparative Analysis To acquire policies or concepts which can be adopted, and its required

conditions

Recommendation To increase performance river basin organization by adopting policies from UK

and USA adjusted by Indonesian context

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1.5 Structure of Research

The research will be divided into five chapters as follow:

Chapter 1 : Introduction

This chapter contains background, research objectives, research question and methodology. The background will explain justification of this research and strengthened by its objectives and research question to guide further chapter.

Chapter 2 : Theoretical Framework

This chapter describes discussion of institutional arrangement, types of river basin organization (function, authority, and example), how to choose appropriate river basin management considering development stage and some important aspects, and policy transfer.

Chapter 3 : River Basin Organization in UK, USA and Indonesia.

This chapter consists of comprehensive practice of river basin organization in three countries: UK, USA, and in Indonesia either their evolution or current condition.

Chapter 4 : Comparative Analysis

This chapter will discuss comparison among three designated basin, the similarities, differences, and some important aspects to be learned Chapter 5 : Conclusions and Recommendations

Concluding remarks will be drawn based on discussion on previous chapter, followed by recommendation for Indonesia adoption.

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C ^{hapter 2}

Theoretical Framework

2.1 Institutional Arrangement on River Basin Management

River basin management inevitably requires set of rule and institution to exercise it.

It means that river basin institution is tools to implement integrated river basin management concept. That is the reason institutional arrangement needed in integrated river basin management.

Ostrom (1990) in Jasper (2003) define institutional arrangement as sets of working rules that are used to determined who is eligible to make decision in some arena, and what actions are allowed or constrained. Rules in this context means what procedure must be followed, what information must or must not provided and what pay-off will be assigned to affected individuals.

In the context of river basin management, institutional arrangement is very important because institutional problem often arises because of competing among water user and conflict between upstream and downstream area. World Bank (2005) emphasize that that successful implementation of decentralized water resources management will depend on feature of the basin-level arrangement created by stakeholders and/or central government officials which include :

1. The presence of basin-level institution;

2. The extent of clarity of institutional boundaries, and their match with basin boundaries;

3. Whether and to what extent basin-level institutional arrangement recognize sub- watershed communities of interest;

4. The availability of forum for information sharing and communication among basin-stakeholders;

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5. The ability to make, monitor, and enforce contingent contract whereby basin stakeholder can agree to contribute to improvements in basin conditions;

6. The institutionalization of regular monitoring of basin conditions by means that are trusted by water users;

7. The availability of forum for conflict resolution

Moreover Jasper (2003) emphasizes the importance of institutional arrangement in integrated river basin management to achieve:

- the functioning of a platform for stakeholders involved in decision making - water resource management on hydrological boundaries

- an organizational set-up in river basin and sub-basin authorities with their respective by-laws to incorporate decision making at the lowest appropriate level - a planning system oriented at the production of integrated river basin plan - the introduction of a system of water pricing and cost recovery

Nevertheless, the existence of river basin institution to manage river basin is perceived insufficient. Some principle must be met as Schramm (1980) point out general guidelines to follow:

1. Institutional framework for the project must allow consideration of a wide range of alternatives to solve observed problem, including those that may be outside the specific responsibilities of planning bodies;

2. Planning agencies must have the expertise needed for multiple objectives planning and evaluation procedures, especially in economic, social, and environmental areas;

3. Institutional framework must facilitate adaptation of the plan to meet changing national, regional, and local priorities;

4. Institutional framework must seek representation of all parties affected by the specific development plans and management;

5. Institutional framework must reward initiative and innovation among the members of the technical team and within cooperating agencies;

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6. Technical team must be sufficiently free from day-to-day responsibilities so that they can concentrates on long-range planning and anticipation of future problems;

7. Institution must have capacity for learning and improving over time, including sufficient continuity over time and the ability to evaluate past programs;

8. There must be sufficient authority within the institutional framework to enforce conformity of execution with construction and operating plans;

9. Institutional framework must be capable of guaranteeing an acceptable minimum level of professional performance by the technical team

10. Plan of implementation stage must include provisions for the timely and qualitatively and quantitatively sufficient supply of needed services by other agencies, as well as provision to assure continued functioning.

However, the implementation of principles guiding river basin management doesn’t guarantee it perform successful. A study in Australia found that although the principles of integrated river basin management are well understood, there are still some problems in implementation. AACM and Centre for Water Policy Research (1995) and Bellamy et al (1999) in Hooper (2003) describe some process as constraints in implementation:

- Problem related to the lack of coordination

- The need to help community catchments management groups mature

- Confusion between bottom-up consultation and community participation and top down policy and government investment;

- The lack of integration of economic development with ecological management;

- The effectiveness of local community institution

In short, institutional arrangement as a tool to implement integrated river basin management concept is very important to achieve several goals related to stakeholder, decision making, basin plan, and financial aspect. Some principles give

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guideline how institutional framework should be developed and directed to minimize failure in implementation due to institutional and process issue.

2.2 River Basin Organization

2.2.1 Type of River Basin Organization

Institution to implement integrated river basin management approach is often called River Basin Organization (RBO). This organization varies in every countries with different emphasizes. Based on scope and authority, Radosevich and Olson (1999) divide river basin at basins into three main classes:

1. Coordinating Water Resources Council

This usually consist of a council of department heads covering the natural resources management and consumptive uses (e.g., agriculture) agencies as well as planning, etc. Such a council would meet irregularly to endorse policy, new initiatives, etc. It would have a small supporting staff and would not intrude on the active functions of existing agencies. Its role is essentially coordinating, recommending policy, supporting, compilation of data, auditing, and reporting, and would have no real management and control functions. It can work well in a

"mature" water industry where most development options have been implemented, where good data and models exist, and where existing agencies (and perhaps basin commissions) function well with only the need for improved communication, coordination and cooperation to reconcile overlaps and fill gaps.

In effect, water is more about improved management strategies and processes than about water development. Example of this form : Regional Water Authorities in UK in 1980s

2. River Basin Commission

This is a more powerful model than the coordinating council and involves an agency with a larger staff (depending upon the size and complexity of the basin) rather than relying on other agencies to carry out some of their analysis and

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report writing. It would concentrate on developing: good data systems and predictive hydrologic models; establishing base-line water use and environmental conservation measures in the basin; developing policies and strategies to guide water planning and development, and environmental (aquatic-ecosystem) rehabilitation and management; and, a systematic process of monitoring and reporting on the "behavior and health" of the basin and uses within it. Example of this type is Murray-Darling Basin Commission, Australia.

3. River Basin Authority

This form of organization is larger, more powerful, and complex in comparison to the other RBOs, and normally is always a national or even state/provincial level organization. It is usually a multi-disciplinary, full-functioning organization covering all aspects of natural resources planning and management, and with regulatory powers. Its jurisdiction is the hydrologic boundaries of the basin, but often is involved in regional (out-side the basin or inter-basin) activities for optimum resource use and equitable accounting of benefits and costs. When established or reformed, it may "absorb" the operation and management role, personnel and facilities of some existing organizations.

Examples of this type are the Hydrographic Confederations of Spain, Tennessee Valley Authority in the USA, and Snowy Mountain Hydro-Electric Authority in Australia

Instead of dividing river basin organization into three simple organizations, Hooper (2006) divides it more complete into nine type of organization:

1. Advisory Committee : A formalized or quasi-formal organization in which individuals take responsibility for undertaking action planning and provide advice; governments ‘hand over’ strategic planning to such organizations; they frequently have no or limited legal jurisdiction. Examples include: Fitzroy Basin Association, Eastern Australia and Verde Watershed Association, South-western USA

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2. Authority : An organization which makes planning decisions at a central or regional government level; may set and enact regulations, or have development consent authority; authorities are founded on democratic principles and a framework of law to which all relevant individuals and institutions are subject in a basin setting. Examples include: Grand River Conservation Authority, South- eastern Canada ; Niger Basin Authority, West Africa; Tennessee Valley Authority, Central-eastern USA

3. Association: Similar to an Advisory Committee, this is an organization of like- minded individuals and groups with a common interest. In a river basin they have varying roles: providing advice, stimulating basin awareness, education and ownership of basin natural resources management issues; educational functions and information exchange. An example is the Missouri River Basin Association, Midwest USA.

4. Commission: An organization which is delegated to consider natural resources management matters and/or take action on those matters. A basin commission’s powers vary, and include advisory/education roles, monitoring roles, undertaking works, fulfilling goals of a specific government’s charter or an international agreement. Commissions normally are instituted by a formal statement of a command or injunction by government to manage land and water resources; commissions may also have regulatory powers. Examples include:

Delaware Basin Commission, North-eastern USA; Great Lakes Commission, North America; International Commission for the Protection of the Danube River, Central & Eastern Europe; International Commission for the Protection of the Rhine , Western Europe; International Joint Commission, North America;

Lake Chad Basin Commission, Central Africa; Mekong River Commission, South-east Asia; Murray-Darling Basin Commission, South-eastern Australia;

North Carolina Environmental Management Commission, South-eastern USA;

Ohio River Water Sanitation Commission, Central- northern USA; Tarim Basin Water Resources Commission, Western China.

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5. Council: A formal group of experts, government ministers, politicians, NGOs and lay people brought together on a regular basis to debate matters within their sphere of basin management expertise, and with advisory powers to government. A council is contrasted with a commission which, although also a body of experts, is typically given regulatory powers in addition to a role as advisor to the government. An example is the Fraser Basin Council, western Canada - North-western USA.

6. Corporation : A legal entity, created by legislation, which permits a group of people, as shareholders (for-profit companies) or members (non-profit companies), to create an organization, which can then focus on pursuing set objectives, and empowered with legal rights which are usually only reserved for individuals, such as to sue and be sued, own property, hire employees or loan and borrow money. Also known as a "company”. The primary advantage of a for-profit corporation is that it provides its shareholders with a right to participate in the profits (by dividends) without any personal liability because the company absorbs the entire liability of the organization. Examples include:

Damodar Valley Corporation, Northern India; The former Snowy Mountains Engineering Corporation (now Snowy Hydro), South-eastern Australia.

7. Tribunal : A basin entity which has formalized procedures and quasi-judicial powers; a heavy Emphasis on bureaucratic decision making; stakeholders may formally participate through hearings; major decisions are taken by independent bodies, like a water pricing tribunal. A Tribunal acts as a special court outside the civil and criminal judicial system that examines special problems and makes judgments, for example, a water tribunal, which resolves disputes between water users. Very few such entities exist purely for river basins management purposes but rather for special purposes, for example, government pricing tribunals. Some tribunals have specific water functions which are a component of a broader river basin's management process, where an RBO may or may not exist. These entities have limited traditional powers of civil government and do not report to other government agencies, except where a local government body may oversee

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entities such as ‘country’ drainage districts, which charges for water. They play an important role in developed countries and many developing countries. An example is the Valencia Water Court, Spain.

8. Trust : A trust is legal device used to set aside money or property of one person for the benefit of one or more persons or organizations. It is an organization which undertakes river basin works; develops and implements a strategic plan;

its mandate is to be the river basin ‘advocate’; it co-ordinates local programs through Memoranda of Understanding or other agreements; it raises local levies (funds) for its works and programs. A Trust keeps monies raised in ‘trust’ for the benefits of its citizens. An example is the former Hawkesbury-Nepean Catchment Management Trust (now part of the Sydney Catchment Authority), South-eastern Australia.

9. Federations : A collaboration of organizations or departments within one government or between state and national governments to establish and undertake actions for river basin management. Local government groupings have emerged in some locations in the USA for regional natural resources governance. Governance actions at various levels (national, state and local) include: agreements on water sharing and water quality management, shared statements of intent; shared policy development; information exchange; joint actions for management of ecosystem degradation. Collaboration is expressed in terms of framework directives, cost-sharing arrangements, joint statements of intent, partnerships, joint programs and agreed policy. Examples include:

International Network of Basin Organizations; Global, based in France;

Chesapeake Bay Commission and the Chesapeake Bay Agreement, Eastern USA;

Council of Great Lakes Governors and the Great Lakes Basin Water Resources Compact, North America; European Commission – Water Framework Directive (Directive on River Basin Management)

Meanwhile, river basin organization can be divided based on its function to water- related activities. Radosevich and Olson (1999) divide it into three groups:

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1. Monitoring, investigating, and coordinating river committee such as Water Resources Council in Srilanka and parts of Malaysia, and several of the river commissions in China.

2. Planning and management commissioning such as the Murray-Darling basin Commissions of Australia, and the international Mekong river Commissions of South East Asia and International Joint Commissions between Canada and the USA

3. Development and regulation authorities such as Tennessee Valley Authority in the USA.

Several type of river basin organization either based on scope and authority or based on function give clear understanding that each organization has different emphasize on environmental problem will be handled, the goal want to be achieved, and government capacity to manage water sector. The division of river basin organization into several type also helps to identify what is the requirement should be fulfilled to implement a certain type or rive basin organization.

2.2.3 Choosing Appropriate River Basin Organization

Choosing appropriate river basin organization needs knowledge of river basin development in which the organization will exercise its task and responsibilities.

The development of river basin reflects real condition its water resources.

Bandaragoda (2006) divide development stage of river basin into three main categories:

1. Infrastructure Development Stage: Usually there is no shortage of good quality water. However, the gradually increasing demand drives the need for development of infrastructure to utilize the resources. At this stage the institutions are geared for infrastructure development, generally focused on a single sector (Irrigation; municipal and domestic supplies etc.). As the water resources of the basins are developed further, the sectoral institutions expand their functions to address the emerging inter-sectoral competition for water.

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2. Utilization/Transition Stage : A significant development of infrastructure has taken place. Although there are opportunities for further development, the cost- effective actions such as water conservation and saving, improved management of water deliveries, and maintenance and management of already-built structures are implemented to make the best use of the already developed facilities. In this phase, managing the supply of water for various uses is a primary concern. Pollution and water scarcity are localized issues, but they begin to emerge as major concerns. Institutions continue to be concerned primarily with sectoral issues, such as managing irrigation water or managing supplies of drinking water. In many situations, environmental issues exist but they are not adequately recognized at this stage of development. Sri Lanka, Indonesia, Thailand and the Philippines have qualified to be in this stage according to the regional study.

3. Allocation Stage : Most of the river basins in the country reach closure, and depletion approaches the potential available water, with limited scope for further development. Efforts are placed on increasing the productivity, or the value of every drop of water. An important means of accomplishing this is to reallocate water from lower to higher-value uses. Managing the demand becomes increasingly critical. Construction of infrastructure is limited to those that aid regulation and control. Institutional issues concern allocation, conflict resolution, regulation, pollution prevention and environmental preservation, or restoration.

Several important management and regulatory functions gain prominence, including inter-sectoral allocation. Coordination becomes important, involving significant transaction costs. Either a single entity emerges to effectively carry out these functions or several interlinked organizations may manage these functions in a given river basin.

There is no author state the best model of river basin organization. Good river basin organization in one country can’t be fully transplanted or replicated to other

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World Bank (2003) give notion to be paid much attention before choosing one type of river basin organization.

1. The physical and morphological attributes and endowments of the basin and its water system, and the supply (development) opportunities.

2. The structure of the demand in the basin, and the capacity and willingness to pay for water-related services by the water users.

3. The administrative, legal, regulatory, and law enforcement structures of the state. Special relevance are of course the questions whether the country has a federal or unitary structure, and to what extent it is decentralized or decentralizing. Similar pertinence is the macro-economic policies and the degree of deregulation of the economy.

4. The historical experiences and culturally defined preferences with respect to governance, collective action, conflict negotiation, etc. Some cultures feel more comfortable with bottom-up approaches whereas others tend to attach greater importance to top-down approaches.

5. Principles of institutional design from the growing body of scientific literature on institutional and related development It should be appreciated that behavioral dynamics are very culture-specific, and that most research so far concerned the European and American cultural settings.

6. Finally, the development of basin management arrangements is an on-going, continuous process, responding to the dynamics of the changes in the social economic environment of the country. It typically works with time horizon of 5- 10 years. Thus, any assessment of the importance or influence that the above

Similar suggestion on choosing appropriate type or river basin organization is given by Radisevich and Olson (1999). They explain that there is one right model that suits all circumstances. At least four attributes has to be meet :

1. System of government, law, and administration 2. Hydro-geological and ecological characteristic

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3. Stage of development and the current system of water management and administration

4. The need and potential for sustainable water and related resources development and environmental management

Figure 2 Set of Factors Determining the Appropriate and Workable Basin Organization Source : World Bank (2003)

In brief, choosing appropriate river basin organization shouldn’t be conducted by directly copying or replicating model from other countries. Instead, it should consider national and local context (basin level) and institutional arrangement principle. Because performance of river basin organization will influence broad aspect not only at basin level but also beyond the basin.

2.3 Policy Transfer

A successful implementation of certain policy in one country can not be fully copied by another country without any consideration in implementation. Dolowitz and Marsh (2001) point out that transferability process should consider the different

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condition among countries such as socio-cultural condition. So that it causes the degree of policy transfer as follow:

- Copying, occurs when a country adopts a programme in use elsewhere without any changes.

- Emulation, happen when country accepts that a particular program elsewhere provides the best standard for designing legislation at home

- Hybridization and synthesis, combing element or programme in two or more countries to develop a policy best suited to the emulator

- Inspiring, expand ideas about what possible to implement

In the case of institutional arrangement in integrated river basin management, policy transfer has to be carried out carefully considering historical background and main issue from which water resource management emerged. To performs successful policy transfer, a “contextual fit’ is needed to avoid uncritical imposition of developed-country institutional model on developing-country river basin context. It might a result of ‘dysfunctional or even counter-productive” (Shah et al, 2001 in Bandaragoda, 2006).

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Figure 3. Framework of Analysis

Existing Condition

→

→ Problem

Lesson Learned Indonesia

UK

River Basin Organization in UK, USA, and Indonesia Theoretical

Framework

Concept of Institutional Arrangement

Type of RBO

Development stage

Factor determinant in choosing appropriate type of RBO

Comparison River basin Organization UK, USA, and

Indonesia Analysis

Positive aspect for Indonesian practice Conclusion and

Recommendations

Chapter 5 Chapter 2 Chapter 1

USA Background

Chapter 3

Evolution of River Basin Organization

Recent River Basin Organization

Chapter 4

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Chapter 3 Institutional Arrangement of River Basin Management in UK, USA, and Indonesia

This chapter depicts institutional arrangement of river basin management in United Kingdom (England and Wales), United States of America, and Indonesia. It will discuss evolution of river basin organization and current river basin organization.

This chapter will be closed by concluding remark to summarize similar and different aspect among three countries.

3.1 United Kingdom

3.1.2 Evolution of River Basin Organization

The first institutional configuration was the establishment of 47 Catchments Boards for each major river catchments in 1930 based on Land Drainage Act 1930. The Ministry of Agriculture was the authority to control land drainage (flood protection).

At the same time the ministry was also organizing-wide Fisheries Boards.

Kinnersley, 1988 in Newson, 1992 highlight these development as an attempt to bring various local interest in a close relationship with central government because of strong position of local interest.

In 1948 River Boards Act created 34 Boards (including Thames and Lea Conservancies). These boards were set to be administrator of system licenses introduced first for discharging pollutants to rivers.

The next evolution was the formation of 29 river authorities (replaced 34 Boards) based on the Water Resources Act 1963. They were responsible for the development of water resources, land drainage, fisheries, the prevention of pollution, and the

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issuances of permits to withdraw water. Each authority had a management board consisting of representatives of local governments and appointees of central government (fisheries, agriculture, and other water-using interests). The river authorities were probably the first nationwide integrated management agencies based on hydrologic units. The allocation of functions to the river authorities also meant a highly-decentralized system of water management (Craine, 1969 in Kromm, 1985).

In addition, local authorities at that time played significant role not only as management board member of river authorities but also as undertaker of sewerage.

They also had operational responsibility in water supply through local authorities companies together with private companies (Johnson and Handmer, 2002).

Those evidences show that local authorities achieve ultimate role on water management since Water Resources Act 1963 enacted. They gained regulatory role in management board member of river authorities and operational role as sewerage and water supply.

Because composition of water management depended mainly on the configuration of local authorities, the reorganization of local government in 1972 forced government to change water functions and create new regional agencies removing river authorities. Government no longer saw water supply and sewage treatment as locally offered public services, but instead viewed water as a commodity to be managed and sold to the public by efficient multipurpose regional monopolies.

Parliament agreed that each of the boards of directors for the new agencies have a majority of its members representing local interests. There was also general agreement that both water supply and the reclamation and disposal of used water were to be under the same management, and that the boundaries were to be based on hydrological conditions, not the new governmental units (Okun 1977 in Kromm, 1985). Since April 1^st , 1974, at the same time local government reorganization was

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implemented, the Water Act 1973 removed most water related services from some 1,600 governmental and private organizations in England and Wales (Scotland and Northern Ireland retain separate water management systems), and entrusted them to 10 Regional Water Authorities (RWA’s). The goals were to integrate water management, to meet water needs with greater efficiency, and to better administer all water resources.

The establishment of ten Regional Water Authorities brought England and Wales to new approach in managing water management from administrative boundaries toward geographically basin boundaries. It also significant shift of management responsibility away from local government and toward a technocratic management style (Synnott, 1995 in Buller, 1996). Buller (1996) point out that era as attempt of England and Wales to concentrate regulatory and management function into the hands of fewer centralized body and to emphasize the importance of large basin river rather than individual section of river as the basic unit of water management.

However, it also triggered some criticisms because of dual role of Regional Water Authorities. The criticism emerged based on the dual role of authorities on hand as regulation enforcer and the other hand as service-provider (Johnson and Handmer, 2002). Moreover it was reported that authorities was under-investment to minimize public sector borrowing for macro economic. Finally it had resulted to poor performance of authorities in maintaining water quality both through tap-water and river (Kinnersley, 1994 in Johnson and Handmer, 2002).

New elected Conservative government in 1979 started to its long campaign for executive efficiency in public life. It also abolished the National Water Council, and thinking that RWAs were now sufficiently competent to manage water-related activities alone (Newson, 1992).

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In July 1989, Parliament passed a new water bill which resulted in the privatization of the ten regional water authorities by the end of 1989. The privatization under the conservative government reflected the belief that the financial needs of the regional water authorities for major investment to repair replaced capital works would be best met through the private sector. The commitment to the watershed focus was reaffirmed and not altered.

New legislation was passed in 1995 which further affirms this commitment to water management on a watershed basis. This new legislation replaces the National River Authority which was created by the privatization Bill in 1989 with a new governmental organization to integrate and combine air/land/water protection within a single unit. The result of this most recent legislation will be to strengthen comprehensive water management at the watershed basis as established in 1974.

Accordingly, the watershed focus for comprehensive water planning and management has been well established for more than twenty years and is being maintained into the future.

The evolution of river basin organization also mean shift in risk and liability over very important three decades from Water Resources Act 1963, Water Act 1973, and Water Act 1989. Johnson and Handmer (2002) summary the institutional change toward risk and liability in this Table below:

Table 1. Institutional Change, Risk and Liability in UK No. Institutional

framework Stakeholders Risk and liability

River Authorities Regulation, Water resources Local Authorities Supply and sewerage operating

Failures, Design and construction Private Companies Supply operating failures, Design and

construction 1. Public control

with localized decision making (1963 Water Resources Act

Water Resources Board Political and legal

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No. Institutional framework

Stakeholders Risk and liability Regional Water

Authorities

Operating failure, Regulation, Design and construction, Environment, Supply security, Water quality

Private Companies Supply security, Supply operating failures, Design and construction 2. Public control

and centralised decision making (1973 Water Act)

Central Government Political and legal, Standard setting Private Companies Water quality, Supply security,

Environment, Operating failure, Design and construction, Market risks, Legal, Financial,

Regulatory

Central Government Political and legal, Standards DEFRA Standard setting, Regulation NRA/EA Environment, Supply and demand,

Regulation

DWI Water quality standards and

Enforcement, Regulation

OFWAT Financial, Supply security standards, Regulation

EU Define levels of risk and establish standards

3. Privatised framework (1989 Water Act)

Shareholders Share value Source : Johnson & Handmer (2002)

3.1.2 Current River Basin Organization

There are eight river basin throughout England and Wales, namely, Anglian, Midlands, North East, North West, South West, Southern, Thames, and Wales. All river basin river basins are under authority of Environment Agency. This agency was established based on the Environment Act 1995 and became fully operational on 1 April 1996. It took over the function of National River Authority, Her Majesty’s Inspectorate of Pollution and Waste regulation authorities.

The Agency is a Non-Departmental Public Body (NDPB) of the Department for Environment, Food and Rural Affairs (DEFRA) and an Assembly Sponsored Public Body of the National Assembly for Wales. The Agency's principal aim is to protect and enhance the environment and in doing so to make a contribution towards the

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objective of achieving sustainable development. In support of this aim, the Agency has a broad range of functions which include: Integrated pollution prevention and control, Integrated pollution control, Radioactive substances regulation, Waste management, Water quality, Land quality, Water resources, Flood risk management, Navigation, Conservation, Recreation, and Fisheries.

Each Region has three main statutory committees as follow: Regional Flood Defence Committee (RFDC), Regional Fisheries, Ecology & Recreation Advisory Committee (RFERAC), and Regional Environment Protection Advisory Committee (REPAC).

Figure 2. Institutional Framework of Water in UK Source : DEFRA (2004)

Summerton (1998) summarize other agencies involved in water management in England and Wales as follow:

1. Drinking Water Inspectorate is part of the Department of the Environment, Transport and the Regions and its legal status is as technical assessors acting on

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behalf of the Secretary of State. The Inspectorate examines each water company annually as to the quality of their systems for ensuring that wholesome water (i.e. water at least conforming to the regulatory requirements as to quality) is provided to customers. The Inspectorate also receives and reports annually on all the operational data of each company and is entitled where necessary to require remedial action by any company that is not in some respect meeting the health and safety requirements. That enforcement action could require the companies to incur extra capital or operating expenditure to deal with the problem.

2. Another regulatory agency whose authority in economic regulation of the private service providers is Office of Water Services, (OFWAT). The agency has powers to limit the prices of the private water suppliers and to oblige them to carry out their responsibilities efficiently.

3. Operator in provision of water and waste water services is the responsibility of private companies. These companies may be distinguished from other private companies in that they have a range of duties laid down in the statute law relating to water and waste water services and they are subject to a more or less close supervision by the Director General of Water Services and his office. They operate under a licence issued by the Director General, a licence which may be removed from them if they are not performing their responsibilities satisfactorily (there are provisions for the transfer of their assets on appropriate terms to a successor licensee in that event).

Coordination between Environmental Agency and other agencies in water management in UK is performed in such way as follow (DEFRA, 2002):

1. Regulated organizations (charge-payers): EA ensure that its staff are aware of the published Code of Practice on the exercise of its regulatory responsibilities, and implement its principles in their work. It should monitor compliance with the Code, and have arrangements for reviewing complaints of non-compliance.

2. Other enforcement agencies: EA work closely with other enforcement agencies (including Local Authorities, the Health and Safety Executive, the Maritime and

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Coastguard Agency, English Nature, the Food Standards Agency, the Countryside Council for Wales, the Welsh Development Agency, the Scottish Environment Protection Agency, and the Northern Ireland Environment and Heritage Service) to minimize and eliminate duplication and conflict in applying legislation, guidance and standards. If there are overlapping responsibilities, the Agency will consult other agencies on proposed actions or statements, other than in exceptional circumstances such as an emergency.

3. Other bodies with responsibilities for protection of public health, including the Department of Health, the Health Department of the Assembly Government, the National Health Service, the Drinking Water Inspectorate, and local authority Environmental Health Departments.

4. Bodies dealing with accidents and emergencies: The Agency liaise and establish effective working relationships with other bodies dealing with accidents and emergencies, including those responsible for emergency planning in central and local government, the Assembly Government, the Department of Transport, Local Government and the Regions and the emergency services.

5. Its Regional Flood Defence Committees: The Agency’s regional flood defence committees are responsible for carrying out all of the Agency’s flood defence functions, other than the issuing of levies, making drainage charges or borrowing money.

6. Its Regional Advisory Committees: The Agency’s regional advisory committees are an important source of local input and of external expertise and challenge.

7. Regional bodies: The Agency work closely with English regional bodies, including the regional development agencies and regional chambers, and other organizations with a strategic role at the regional level. The Agency works with regional bodies to produce regional sustainable development frameworks, and contributes to regional planning guidance and regional development agencies.

8. Local authorities are key partners in areas such as flood defence, planning and development control, control of air pollution, and waste issues. The Agency is a statutory consultee in relation to planning and development control issues. The

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Agency should work in partnership with local authorities as they develop their community strategies (local sustainable development strategies).

To finance its operation Environment Agency charge any water user in England and Wales as follow:

1. Charges for abstraction and discharges to statutory water undertakers (water services) and other ‘users’ who engage in either private supply or self-services involving abstraction and discharging (agriculture, industry, power generation) 2. Pollution incident and cost recovery charges (PICR) as levied by the EA and

pollution fines as imposed by the courts. These can apply to a variety of users when ‘polluting’ –including industry, agriculture and potentially households although the latter is less likely (mostly small scale pollution which would be difficult to source accurately).

3. License fees from anglers (statutory requirement for recreational fishing)

However The Environment Agency is still partly funded (about 27% of total resources) by Government grants from the Department for Environment Food &

Rural Affairs (Defra) and the National Assembly for Wales (NAW) (DEFRA, 2004).

3.2 United States of America (USA)

3.2.1 Evolution of River Basin Organization

The first river basin organization in USA is Mississippi River Commission. It was created in 1879 as the response to repeated flooding which couldn’t be handled with local authorities. Started by survey of federal government in 1851 and resulted in suggestion that two issue (flood control and navigation) was interrelated water management problem (Petersen, 1984 in Thompson, 1999). Mississippi River Commission was responsible in developing plans for navigation and flood control.

In 1902 Congress created the Reclamation Service (renamed the Bureau of Reclamation in 1923) and authorized the Secretary of Interior by Reclamation Act to

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construct irrigation projects, reservoirs, and diversion canals in 17 the western states and territories. Its mission was soon extended to hydropower facilities. By 1906 the Reclamation Service had started project in 15 states for irrigation of 2.5 million acres (Thompson, 1999)

The function of Corps of Engineer and Bureau of Reclamation continue to overlap when Congress authorized the US Army Corps of Engineers to complete comprehensive river basin studies based on 308 Act (called 308 Reports) throughout the US in 1925. This study has special view to coordinate development of navigation, flood control, irrigation, and power production. Later these reports contributed to a series of river basin commission’s establishment.

President Roosevelt and Congress passed the TVA Act in 1933 to manage water resources and provide energy in the Alabama, Georgia, North Carolina, Tennessee, and Virginia portions of the Tennessee River watershed. Under the TVA Act of 1933, the Tennessee Valley Authority (TVA) has statutory authority to manage the multi state basin of the river and tributaries for flood control, power production, and navigation

In 1965 Congress passed the Water Resources Planning Act. The Act authorized the creation of federal-state river basin commission and created Water Resources Council (WRC). The WRC consist of Secretary of Agriculture, Army, Health, Education and Welfare, Interior, and Chairman of Federal Power Commissions. The WRC has task to advise the president at the highest level on water resources matters.

Unfortunately it was dissolved in 1982.

The first environmental legislation in 1948 was followed by National Environmental Policy Act of 1969 which requires an environmental impact statement (EIS) for federal actions that affect the quality of the human environment. NEPA also created the Council on Environmental Quality which was put under presidential

Institutional Arrangement of Integrated River Basin Management: Analysis of River Basin Organization